The Enterprise System Spectator

Tuesday, May 20, 2003

PeopleSoft CEO compares Microsoft .NET to ... asbestos?

Just two weeks after PeopleSoft's announcement that it is porting all of its products to Linux, CEO Craig Conway is making it clear that PeopleSoft's push toward Linux is a move away from Microsoft. "The answer to the death grip Microsoft has on the industry is an alternative operating system," he said at a PeopleSoft conference in Australia. "That's why PeopleSoft has decided to port all our applications to Linux," he said.

Conway drew a sharp contrast between PeopleSoft's server-based architecture and Microsoft's .NET framework, which leverages Microsoft operating systems on both the server and the client. "Running enterprise software on a PC is a known bad thing. It's like asbestos," he said. ".Net is a home formula to make your own asbestos. PeopleSoft is absolutely convinced enterprise software should not be resident on PCs."

Conway's remarks show how far PeopleSoft has come since the early 1990s, when it boasted of being one of the first enterprise application vendors to fully leverage Microsoft technology. One would have expected such a comparison of Microsoft to asbestos from Oracle's Larry Ellison, not PeopleSoft's Conway. Although, Ellison would have probably added that the comparison was an insult to the former asbestos industry.

Friday, May 16, 2003

SSA GT making good on its product extension promise by interfacing BPCS with Warehouse BOSS. Last month I commented on the strategy of both MAPICS and SSA GT in building a large installed base by acquiring weaker competitors, then leveraging sales of common extension products across the entire installed base. It now appears that SSA GT is following through on this strategy by interfacing BPCS, its core ERP suite, with Warehouse BOSS, which it picked up in its acquisition of the Interbiz unit of Computer Associates last year. Warehouse BOSS is a fairly robust warehouse management system, running on the IBM iSeries (formerly AS/400), which makes it a good fit with BPCS, which runs on the same platform. Warehouse BOSS is a good example of how a product that SSA can leverage to multiple segments of its user base--it now has links to several ERP suites from SSA: PRMS, BPCS, and KBM.

Tuesday, May 13, 2003

Is Sarbanes-Oxley the new Y2K?

The Sarbanes-Oxley Act was passed by Congress in 2002 in response to a number of high profile financial scandals, such as those at Enron and WorldCom. Its goal is intended to make corporate accounting procedures more transparent to investors and regulators. Although the law includes a number of new mandates, there are two sections that have clear implications for corporate information systems. Section 404 (Management Assessment of Internal Controls), with a deadline at the end of 2003, requires management to assess each year the effectiveness of its own internal controls and procedures for financial reporting, and Section 409 (Real Time Disclosure) requires companies to disclose material changes in their financial condition or operations on a rapid and current basis. These two Sections each spell more spending on IT.

First, Section 404, which requires audit of internal controls, will likely lead executives to reexamine and possibly replace operational systems that are not well integrated with financial systems. For example, an A/P system that does not systematically match purchase orders and receivers to vendor invoices prior to payment might be vulnerable to fraud. Or, an invoicing system that is not integrated with shipping might allow a manager to improperly recognize revenue that was not yet earned.

Furthermore, the timeliness requirement of Section 409 seems to call for a much more transparent and integrated financial reporting system than many companies have today. For example, companies that are accustomed to working on a 10 day financial closing period would seem to be at risk for non-compliance with the real-time disclosure requirement, which is currently interpreted as demanding disclosure of material events within 48 hours. The problem is particularly acute for firms with multiple operating units and decentralized systems. Such companies will either need to adopt a common financial reporting system, or integrate multiple systems with a financial reporting layer at the corporate level, and/or implement an enterprise performance management (EPM) solution to provide real-time analytics. In any case, Sarbanes-Oxley spells increased spending for enterprise systems.

In a recent survey of Fortune 1000 companies by AMR, 85% of respondents said that Sarbanes-Oxley will require changes to their IT and application infrastructure. This is reminiscent of the late 1990s, where companies made large investments in new systems to prepare for the Year 2000 (Y2K) date roll-over. If so, Sarbanes-Oxley comes none too soon for vendors of enterprise systems, who have been looking for the next Y2K since, well, Y2K.

Tuesday, May 06, 2003

PeopleSoft climbs aboard the Linux bandwagon. At its user conference in Las Vegas on Tuesday, PeopleSoft announced that it is porting and optimizing all of its applications for Linux, the open source operating system. PeopleSoft will partner with IBM for Linux deals, with IBM providing its xSeries hardware, DB2 database, and WebSphere Application Server. PeopleSoft plans to complete the migration of all of its products to Linux by the end of 2003.

Although Linux has made great strides in establishing itself in data centers, its role has been largely restricted to running Web servers, file servers, and messaging platforms. Its growth beyond such infrastructure services has been limited by the fact that, until recently, there have not been many enterprise-class applications that can run over Linux. But now PeopleSoft joins a number of other enterprise system vendors, such as SAP, Oracle, and QAD, in offering support for Linux. This trend appears to be growing, and if it continues it could allow Linux to play a central role in the application architecture of many organizations. Some industries that rely more on custom applications, such as financial services, are already heavy users of Linux, which offers a cost-effective and reliable platform for high volume transaction processing. With vendors of commercial software such as PeopleSoft getting on the bandwagon, this trend to Linux will likely accelerate.

For a more extensive discussion on Linux total cost of ownership (TCO), see my post on Dec. 17, 2002.

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